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Final Report SOCIALIST REPUBLIC OF VIETNAM DATA COLLECTION SURVEY ON COOPERATION IN OVERSEAS BUSINESS EXPANSION STRATEGY OF SMALL AND MEDIUM-SIZED ENTERPRISES IN AGRICULTURE SECTOR AND FUTURE DIRECTION OF AGRICULTURAL COOPERATION FINAL REPORT Summary March 2020 Japan International Cooperation Agency (JICA) Nippon Koei Co., Ltd. Meros Consulting Co., Ltd. VT JR 20-002 North West North East Son La province Red river Delta (Son La city) Ha Noi capital Nghe An Province (Vinh City) North Central Coast Legend: : Target Area South Central Coast Central Highlands Ho Chi Minh city Lam Dong Province (Da Lat City) Ben Tre Province (Ben Tre City) Can Tho city Mekong River Delta 0 100 200km Source：Survey team Location Map of Target Area Site Photos (1) Nghe An Province Production materials for mushroom production Fermenting process of fish source using wooden barrel (ATC Investment and Production Joint Stock Company) (Van Phan Fisheries Joint Stock Company) (2) Lam Dong Province Hydroponic plant culture of lettuce Coffee bean roaster (specially ordered) (Phong Thuy Agricultural Product Trade Manufacturing Co., Ltd.) (La Viet Co., Ltd) (3) Can Tho City Drying machine for fruits Pre-processing of durian (Mekong Fruit Co., Ltd) (Dai Thuan Thien Co., Ltd.) (4) Ben Tre Province Coconut processing factory (large scale: 5 ha) Coconut fruit processing (Luong Quoi Coconut Co., Ltd.) (Mekong Impex Fresh Fruit Co., Ltd.) (5) Son La Province Production of lingzhi mushroom using raw timber Drying machine for fruits (Manh Thang Company Ltd.) (Quyet Thanh Agriculture Cooperative) (6) Seminar Hanoi January 14, 2020 HCMC, January 16, 2020 Data Collection Survey on Cooperation in Overseas Business Expansion Strategy of Small and Medium-sized Enterprises in Agriculture Sector and Future Direction of Agricultural Cooperation Final Report Table of Contents Page Summary S-1 i List of Abbreviation ADB : Asian Development Bank AMPF : Agricultural Marketing Platform ASF : African Swine Fever CAGR : Compounded Annual Growth Rate CPTPP : Comprehensive and Progressive Trans-Pacific Partnership DARD : Department of Agriculture and Rural Development DOC : Department of Construction DOF : Department of Finance DOH : Department of Health DOIT : Department of Industry and Trade DOLISA : Department of Labour, Invalids and Social Affairs DOT : Department of Transport DPC : District People's Committee DPI : Department of Planning and Investment DR : District Road EVFTA : EU-Vietnam Free Trade Agreement FAO : Food and Agriculture Organization FDI : Foreign Direct Investment FVC : Food Value Chains GAP : Good Agricultural Practices GDP : Gross Domestic Production GoJ : Government of Japan GoV : Government of Vietnam GPDP : Gross Provincial Domestic Production GSO : General Statistical Office HCMC : Ho Chi Minh City HH : Household ICD : International Cooperation Department (MARD) JETRO : Japan External Trade Organization JICA HQ : JICA Head Quarter JICA : Japan International Cooperation Agency MARD : Ministry of Agriculture and Rural Development MOF : Ministry of Finance MOH : Ministry of Health MOIT : Ministry of Industry and Trade MOLISA : Ministry of Labour, Invalids and Social Affairs MPI : Ministry of Planning and Investment NGO : Non-governmental Organization NH : National Highway Nos : Number NRD : New Rural Development NTP : National Target Program ODA : Official Development Assistance PPC : Provincial People’s Committee ii PPP : Public Private Partnership PR : Provincial Road SEDP : Socio-Economic Development Plan SEDS : Socio-Economic Development Strategy SWOT : Strengthens Weakness Opportunities Threats TA : Technical Assistance TBD : To be determined UN : United Nations UNDP : United Nations Development Programme USD : United States Dollar VASS : Vietnam Academy of Social Sciences VAT : Value Added Tax VCA : Vietnam Cooperative Alliance VND : Vietnamese Dong WB : World Bank Measurement Units Length Weight mm = millimeter(s) g = gram(s) cm = centimeter(s) (cm = 10 mm) kg = kilogram(s) (1,000 grams) m = meter(s) (m = 100 cm) ton(s) = metric ton(s) (1,000 kg) km = kilometer(s) (km = 1,000 m) Time Extent sec = second(s) cm2 = square centimeter(s) (1.0 cm × 1.0 cm) min = minute(s) m2 = square meter(s) (1.0 m × 1.0 m) hr = hour(s) km2 = square-kilometer(s) (1.0 km × 1.0 km) ha = hectare(s) (10,000 m2) Others Acre = 0.4047 hectare(s) (4,047 m2) ° = degree °C = degrees Celsius Volume % = percent cm3 = cubic centimeter(s) (1.0 cm × 1.0 cm × 1.0 cm, or 1.0 ml) m3 = cubic meter(s) Currency (1.0 m × 1.0 m × 1.0 m, or 1.0 kl) US$ = United State dollar(s) L = liter (1,000 cm3) JPY = Japanese yen(s) MCM = million cubic meter(s) VND = Vietnamese Dong(s) iii Final Report SUMMARY 1. Preface In Vietnam, agro-forestry-fishery sector plays an important part in the economy, accounting for 14.7% of GDP and 37.7% of the labor force in 2018. Along with the expansion of the domestic consumer market, many domestic and foreign companies have invested and expand their business to agriculture, forestry and fisheries sector, including the production process, as well as from distribution to processing. The Vietnamese government wishes to increase the added value and improve international competitiveness of the agricultural sector, and has positioned agricultural development as an important policy. To support the efforts of the Vietnamese government, the Medium to Long term Vision for Japan - Vietnam Agricultural Cooperation (2015-2019), which was agreed by the two governments, gives priority to the investment and development of food value chain (FVC) including production, processing, distribution and consumption; the improvement of productivity and added value; and designates the model areas. Thanks to the efforts made by the public-private partnership between Japan and Vietnam, private enterprises, including Japanese companies, have been increasingly advancing into the agricultural field and they have achieved success to a certain extent. However, private companies still have to face with many shortcomings when doing business in Vietnam. Therefore, with a view to gradually revise the Medium to Long-term Vision for Japan-Vietnam Agricultural Cooperation, in order to study the future direction of JICA in terms of supporting the overseas expansion of Japanese businesses (especially SMEs) and cooperation in agricultural sector, the survey team implemented data collection and assessment on assistance made to Japanese companies in agricultural field in Vietnam, business status of the companies invested in Vietnam. The survey area is the whole of Vietnam, especially six model areas (firstly the suburb of Hanoi, secondly the suburban of Ho Chi Minh City, thirdly Nghe An province, fourthly Lam Dong province, fifthly Mekong River Delta adjacent to Can Tho City and Ben Tre Province), and the model area candidate for the next phase (temporarily Son La Province). 2. Agriculture and Food Value Chain in Vietnam Agriculture, fishery and forestry sector is the backbone of the Vietnamese economy, accounting for around 38% of labor force (about 21 million people), and around 15% of the gross domestic product (GDP, amounting to USD 33 billion with an annual growth rate of 3.7%). Taking advantage of the diversified geographical and climate conditions with a stretch of 1,700 km from north to south, from coastal plains to inland highlands and mountainous areas, varieties of agricultural products are produced under various farming systems. Domestic production cannot keep up with demand growth of domestic food market due to economic and population growth, which leads to increase of food imports. The food processing S-1 Final Report industry using imported raw material has been expanding. The domestic food market is estimated to increase approximately 30% over the next five years (2020-2025). 3. Nghe An Province Issues at each FVC stage For fruits and vegetables, it is necessary to develop production areas of branded specialty products, improve quality and technical levels, and improve material supply to be resilient to the changing environment of demand in domestic and international market, intensified competition, and the climate change. Livestock production structure is expected to transform from small-scale production to dedicated medium-scale production. This change will highlight the need for development of the feed industry, slaughterhouse, meat processing and distribution network. In the marketing side, it is necessary to establish a distribution networks for trading to other provinces and international market. For the provincial market, it is necessary to take countermeasures with priority given to traditional market. SWOT analysis from the view point of Japanese companies (especially SMEs) Using SWOT analysis (strengths, weaknesses, opportunities, threats) based on relative comparison with the whole country or neighboring countries, the survey team analyzed the investment potential of Japanese companies (especially SMEs) and critical issues in the target province. The strengths of Nghe An Province are as follows: Abundant and low cost labor force. Many workers have been sent to Japan. Irrigated area will expand by 27,000ha by an irrigation projects of Japan’s ODA. Production of fruits and vegetables increases due to expanding domestic and export market. Livestock and fisheries are also promising. There are the companies with export experience. Diverse weather and terrain conditions. Possible to grow tropical fruits. In mountainous areas, year-round supply is possible. The opportunities of Nghe An province as follows:
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